Teresa JW Bailey of Waddell & Associates: “Housing comes first”

Housing comes first. Whether it’s the navigation of cohabitation or the decision of who will keep the house and whether or not the mortgage needs to be refinanced, housing must come first. You and your partner may have agreed to live together for the time being, but it’s important to start putting together a long-term […]

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Housing comes first. Whether it’s the navigation of cohabitation or the decision of who will keep the house and whether or not the mortgage needs to be refinanced, housing must come first. You and your partner may have agreed to live together for the time being, but it’s important to start putting together a long-term plan for the future. Many times, I find that one party will have an emotional attachment to a home and will fight to keep it even if they cannot afford the payment and maintenance.

As part of our series about the “5 Things You Need To Know To Survive And Thrive After A Divorce Or Breakup”, I had the pleasure of interviewing Teresa JW Bailey. She is a Wealth Strategist for Waddell & Associates, an SEC-registered investment advisory firm, where she serves as a CERTIFIED FINANCIAL PLANNER™ (CFP®) professional and a Certified Divorce Financial Analyst® practitioner.

It’s Teresa’s mission to stay involved with her community and speak on the importance of financial planning and connecting industry professionals. She is the former Chair of the Greater Memphis Chapter of the Financial Planning Association (FPA) and previously served on the Economic Club of Memphis Board of Directors, and under the National CFP® Board, she’s an advocate for women entering the field of financial planning.

Thank you so much for doing this with us! Before we dig in, our readers would like to ‘get to know you’. Can you tell us a bit about how you grew up?

I grew up in an area just outside of Memphis, Tennessee. I was a shy, introverted kid interested in reading and doing creative projects in the house. My family lost my mother when I was very young, so I was primarily raised by my father. Many of my summers were spent in the passenger’s seat of his company car, as we drove around the southeastern United States making sales calls to manufacturing plants. Those summers were the silver lining to my mother being gone. I learned how to use a road atlas, observed how my father identified needs for his clients, and saw how he built strong relationships that evolved beyond just manufacturing plant sales discussions.

Can you tell us a story about what brought you to this specific career path?

During my college years, I started as an “undecided” major. I bounced around from the business school to the school of art, and back again to the business school. I quickly learned my business skills were much stronger than any artistic talent!

Once I was back in business school, I landed in finance because of its practical application in life, no matter what my future held. My concentration in divorce financial planning began pretty early in my career when several new clients in a relatively short time had what I would call “post-divorce balance sheet chaos.” The issues were varied — one emerged without enough alimony income to pay household expenses, another was granted assets owned by the other spouse and later learned that those assets could not be transferred to a new owner, and the third case involved a family business that sold after the divorce and the result was quite traumatic to my client.

Frustrated by this clean-up pattern, I reached out to family law attorneys to learn more about the technical aspects of the divorce process and also eventually earned a Certified Divorce Financial Analyst® designation. The CDFA education materials gave me an understanding of the financial planning nuances that divorce brings. Still, most valuable to my ability to help my clients were several key mentors in family law. Those individuals brought the process to life for me and helped me understand how much human behavior can influence a case. I have a tremendous amount of gratitude for their influence on my career.

Can you share the most interesting story that happened to you since you started this career?

My first case that went to trial was intense. It involved family trusts, and we sifted through and prepared so much data. On the morning that my colleague took the stand as an expert witness using our data, I found an error in one of my calculations used in an exhibit. Before I had a chance to share the news of the error, imagine my horror when I walked into the courtroom that morning and saw that my client’s legal team used that report for a giant visual aid. My error on display — larger than life! Thankfully, the error did not change the outcome of the report. The legal team located a giant black permanent marker made the corrections in real-time, and I emerged with a new, fresh appreciation for the accuracy review process.

Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?

There really aren’t many funny moments in divorce, especially mistakes. It’s a very fragile moment in life, and on the occasion, you are able to laugh with a client, the feeling is that laughter-through-tears emotion. You know, like Sally Field in “Steel Magnolias,” when she’s in the cemetery having a come-apart and then Olympia Dukakis throws Shirley MacLaine in front of her and tells her to “Take a whack at Ouiser!” None of us would likely refer to that moment as a funny one, but it certainly made us all laugh.

Do you have a favorite “Life Lesson Quote”? Do you have a story about how that was relevant in your life or your work?

My favorite quote for my business life is from Dwight D. Eisenhower: “In preparing for battle, I have always found that plans are useless, but planning is indispensable.”

Every day, when I sit down at my desk with my cup of coffee, I’m preparing for battle on behalf of each one of my clients, especially in a divorce case. Rarely does a client end up with the perfect outcome, but the beauty of the planning process is that it uncovers what’s really necessary. Adjustments to expectations — and asset divisions — are more easily made.

Are you working on any exciting new projects now? How do you think that will help people?

I’m most excited about my renewed focus to author more content on behavioral finance concepts. Facing a divorce is emotionally intense. And I can speak from experience that it is difficult to make decisions — even more challenging to find confidence as you make those decisions.

I hope that individuals reading more about behavioral finance concepts will increase overall awareness that financial decisions involve both psychology and math. I believe becoming more self-aware about impulses, biases, and blind spots will lead to a greater understanding of the value of forming a working relationship with a holistic wealth strategist. That individual can act as a behavioral coach in trying times, such as divorce, where it may be very difficult to make appropriate decisions.

Ok. Thank you for that. Let’s now shift to the main part of our discussion. Can you tell us a bit about your experience going through a divorce, or helping someone who was going through a divorce? What did you learn about yourself during and after the experience? Do you feel comfortable sharing a story?

Experiencing the event in my own life definitely entirely changed my approach to divorce planning. However, the divorce situations with the most meaning in my life have been the times when my clients come to me with very little financial knowledge and virtually no confidence. One case, in particular, dealt with an abusive, alcoholic spouse that had convinced my client that they could not afford a divorce. When we sat down to review my client’s balance sheet and expenses, we learned that even if her half of their liquid assets earned a zero percent annual return, she was 400 percent funded through age 90. She’d spent years and years believing her spouse and scraped together every penny she could. We spent many, many hours together helping her re-write the scripting in her mind that she was “poor” and that spending money on anything discretionary was irresponsible. I wish I could say that this was the only situation I’ve experienced like this in a divorce, but there are many. Money matters are highly emotional and often an easy tool for manipulation. I’ve learned that I truly enjoy helping someone bring themselves out of the fog of financial insecurity, shame, or deception and into a place in their lives of confidence and financial freedom.

In your opinion, what are the most common mistakes people make after they go through a divorce? What can be done to avoid that?

The first mistake I see people make is not building their divorce team. It’s no secret how stressful the divorce process can be. Assembling the right team of qualified experts is essential to achieving the best possible outcome and alleviating as much stress as possible for yourself. You will need an excellent lawyer, financial specialist, and I always recommend a good therapist.

Second: Forgetting to plan for life after the divorce. Certified Divorce Financial Analyst® practitioners are trained and experienced in financial forecasting. Let them help you split up assets and formulate realistic post-divorce budgets.

And for obvious reasons, try to keep your slurs about your ex away from the kids’ ears.

People generally label “divorce” as being “negative”. And yes, while there are downsides, there can also be a lot of positive that comes out of it as well. What would you say that they are? Can you share an example or share a story?

Divorce highlight: financial freedom. I’m a Certified Divorce Financial Analyst® practitioner and divorcee. I can back this both professionally and personally!

Divorce grants you control over your money, allows for easier budgeting and provides the opportunity to live a peaceful, non-arguing life doing the things you want to do. This control will feel good after those financial battles with your ex.

Some people are scared to ‘get back out there’ and date again after being with their former spouse for many years and hearing dating horror stories. What would you say to motivate someone to get back out there and start a new beginning?

You should give yourself this space to feel whatever it is you want to feel, as long as you don’t do anything your attorney has directed you to avoid, whether that’s dating, making contact, etc. Take this time to care for yourself while rebuilding your life during and after the divorce.

With that said, how many times in life are you granted a complete do-over? Take full advantage of it.

What is the one thing people going through a divorce should be open to changing?

Create a new estate plan, or update your existing plan. There is no better time to make changes to your estate plan than a life-altering event. Update or create a power of attorney for healthcare and finances, living will, and other documents. If you had a living trust, work with your estate attorney to create a new trust.

Ok, here is the main question of our discussion. If you had a close friend come to you for advice after a divorce, what are 5 things you would advise in order to survive and thrive after the divorce? Can you please give a story or example for each?

1 . The differences between Certified Divorce Financial Analysts® and attorneys. Given the circumstances of today’s economy, having a financial expert on your divorce team is imperative. Attorneys are experts in legal matters. Certified Divorce Financial Analyst® practitioners are trained and experienced in financial forecasting. They have the day-to-day financial industry knowledge, especially when there is major reform to areas such as tax, retirement accounts, and social security. Many CDFA® practitioners are also financial planners, meaning they likely have experience working with clients over a long period of time, which provides them a greater understanding of how income, expenses and asset growth trends over time. In contrast, a divorce attorney only works with a client on an as-needed basis and may not ever see the long-term effect of the assumptions they use.

2 . Housing. Housing comes first. Whether it’s the navigation of cohabitation or the decision of who will keep the house and whether or not the mortgage needs to be refinanced, housing must come first. You and your partner may have agreed to live together for the time being, but it’s important to start putting together a long-term plan for the future. Many times, I find that one party will have an emotional attachment to a home and will fight to keep it even if they cannot afford the payment and maintenance.

3 . Alimony. What alimony number is “fair?” That is a legal question, and right now many people do not know what their financial future holds, making it even more challenging to negotiate alimony. There is no straightforward answer to what is “fair.” Each state abides by a law dictating what factors must be considered in setting spousal support; however, judges tend to look at the following:

  • Recipient spouse’s needs
  • Payer spouse’s ability to pay
  • Length of the marriage
  • Previous lifestyle
  • Age and health of both spouses

4. The little things. Both women and men do not realize the life adjustments that come with transitioning from a couple to a single. Financially you forget that you’ve been receiving couples/household discounts on auto insurance policies and that if you have family health coverage including dependents, removing one of the parents typically doesn’t decrease the monthly premium. Your social life will usually change dramatically as well, especially if there is a shared friend group.

5. Team. Lastly, have a team. You’ll need legal, financial, and emotional experts. You’ll need support services from people you are paying to give you advice. Use this time to build your divorce team.

The stress of a divorce can take a toll on both one’s mental and emotional health. In your opinion or experience, what are a few things people going through a divorce can do to alleviate this pain and anguish?

Divorce means change, and change can be difficult to cope with. The good news is there are various ways to help alleviate this pain. First, consider seeing a therapist. Expressing your feelings about the divorce process can help lift a huge weight from your shoulders and do good for your mental state. If you’re facing financial struggles, meet with a Certified Divorce Financial Analyst® practitioner or financial planner to get help budgeting your new lifestyle. Lastly, keep yourself busy! Whether that means you choose to pick up a new hobby or surround yourself with loved ones during a difficult time, less downtime equals less alone time. It may be hard to envision your future, but eventually this new lifestyle will become normal and you won’t need to rely so much on things or people to keep you busy. But, in the meantime, utilize your resources!

Do you have any favorite books, podcasts, or resources related to this topic that you would recommend to our readers?

Since I typically see that family law attorneys have great resource lists for books on divorce and even finances in divorce, I’ll make note of two that I routinely refer to that are completely unrelated to the topic of divorce. First, “The Artist’s Way” by Julia Cameron, which teaches exercises to assist people in gaining self-confidence in harnessing their creative talents and skills. The other is “Attached: The New Science of Adult Attachment and How It Can Help You Find — and Keep — Love.” I recommend reading “Attached” not so much for finding love, but if you’re in a divorce situation where you are continually triggered by your ex’s behavior, it may be that your attachment styles are in conflict. Both books are incredibly helpful in beginning the healing process during and after a divorce.

Because of the position that you are in, you are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂

I would love to see a movement to remove the stigma and shame around a lack of knowledge and confidence in personal finance, especially with women! Recent studies show that women will soon become decision-makers for the bulk of the liquid investment assets in The United States. Now is the time to collectively let go of the embarrassment and begin the learning process, for the good of the entire nation!

We are very blessed that very prominent leaders read this column. Is there a person in the world, or in the US with whom you would love to have a private breakfast or lunch and why? He or she might just see this if we tag them 🙂

I’m reading her book right now, so this one is very top of mind! I would love to visit with Maye Musk, author of “A Woman Makes a Plan” and mother of Elon, Kimbal, and Tosca. Her stories of “a lifetime of adventure, beauty, and success” are inspiring. It would be quite an honor to hear more in person and gather insights for my single-mother clients (and myself!).

Thank you for these great insights and for the time you spent with this interview. We wish you only continued success!

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